Moscow and Tokyo have been locked in a territorial dispute for more than a century over the Kuril Islands, which extend in a chain between the two countries. The islands have changed hands repeatedly throughout history, though after World War II the Soviets occupied the disputed islands and expelled their Japanese inhabitants. Because Japan sees Russia as an occupying force in the Kurils, Moscow and Tokyo have never signed a peace treaty to end their World War II hostilities. Since that time, Russia has viewed Japan as part of the U.S. alliance structure. The two countries have had a relatively poor relationship and fairly low levels of trade.
But in recent years, both countries' circumstances have changed, leaving the two to explore a possible end to the dispute and a warming of relations. First, Japan's energy consumption patterns shifted after the Fukushima Daiichi nuclear disaster in 2011. The change occurred just over a year after Russia began exporting more oil eastward and made plans to begin constructing natural gas pipelines.
In 2013, the countries also discussed two major investment deals: a Russo-Japanese investment bank that would help the Russian state privatize assets, and Japanese investment into Russia's energy sector, particularly Gazprom's East Siberia fields and a possible liquefied natural gas facility at Vladivostok. The deals would be the first major investments between Tokyo and Moscow outside of the Sakhalin-2 LNG facility, which is located on an island Japan technically still considers its territory. These opportunities led Moscow and Tokyo to explore a possible deal over the Kuril Islands in 2013, which proposed that Russia give two of the islands to Japan and promise to return the other two islands within the following decade.
The thaw in Russo-Japanese relations halted after the 2014 uprising that replaced the pro-Russian government in Ukraine with a Western-backed government. Western sanctions against Russia followed, and Russia grew more internationally isolated. Russia likely would have continued pursuing stronger ties with Japan if Tokyo had not signed onto the sanctions against Russia and spoken out against the Russian annexation of Crimea. In May, Russian Duma Speaker Sergei Naryshkin said Japanese officials had indicated that the United States had pressured Japan into joining the sanctions.
Since then, Russia has increased its military activities in the Pacific, conducting military flights around Japan's northern islands and holding exercises on the disputed Kuril Islands. Over the summer, a series of Russian politicians and officials visited the islands. The Japanese government launched formal protests against Russian Prime Minister Dmitri Medvedev's visit in August. The Russian government has backtracked on negotiating and even changed its tone concerning the islands. Lavrov stated Sept. 22, "No progress can be made without a clear understanding of the historical facts as a result of World War II," meaning the Russian government now wants Japan to recognize that the Kuril Islands belong to Russia. Because of Moscow's new stipulation, Lavrov admitted that he and his Japanese counterpart would not even discuss the islands.
This makes any settlement on the issue highly unlikely in the foreseeable future. For Russia to agree to give the islands back to Japan, Moscow would have to recognize the islands as Japanese. Having recently annexed Crimea, Russia does not want to show either its domestic audience or the international community that it is willing to cede territory if pressured.
However, this does not mean that Russia and Japan do not need high-level dialogue. The countries have agreed to resume their 2+2 talks, a mechanism through which their foreign and defense ministers meet regularly. Both countries are involved in and see increased military activities in the Pacific. Russia, however, is wary that Japan — a key U.S. ally — could be part of Washington's policy of containing Russia. But Japan also does not want to see relations between Moscow and Beijing grow into a force that could act as an axis against Washington and Tokyo. Russia, meanwhile, does not want to base its eastern strategy on China and would like to have multiple East Asian customers for its energy exports.
Russia also wants to separate the territorial dispute from Japanese firms investing in Russia, something Japanese businesses are keen to do. However, for Japanese companies to flood Russia's energy sector with their advanced technology, Tokyo will have to wait for the sanctions on Russia to be lifted. Japan has shown that it will not work against U.S. wishes concerning Russia. Moscow is hoping to create an atmosphere over the next few years that will lead to the lifting of sanctions, so now is the time for Russia to resume talks with Japan in hope of warming bilateral ties again in the years to come.